For global rebalancing deficit economies must save more: RBI
Washington, April 17
The Reserve Bank of India has said global re-balancing will require deficite economies to save more and consume less while depending more on external demand.
Addressing a meeting of the International Monetary Fund, RBI Governor D Subbarao said that surplus economies will need to mirror these efforts and shift from external to domestic demand.

New guidelines soon on service to bank customers
New Delhi, April 17
Bank customers may soon expect better services and fast-track redressal of their grievances as RBI is likely to soon consider a fresh set of rules to improve the banks’ customer service practices.

Mukesh Ambani has big plans for financial business
New Delhi, April 17
Billionaire industrialist Mukesh Ambani-led Reliance Industries (RIl) plans a big splash in financial services sector, but may take a path different than those adopted traditionally in the business of money.
RIL signed a joint venture with global private equity fund house DE Shaw late last month for its financial sector foray and is now considering businesses where it can utilise its expertise and presence in sectors like energy and retail, as also its proposed telecom and power ventures.

Tatas to invest Rs 1.2 lakh cr in five years
New Delhi, April 17
Diversified business house Tata Group will invest up to Rs 1.2 lakh crore across sectors in the domestic market in the next five years as it looks to more than double its revenues to $150 billion (about Rs 6.64 lakh
crore)
by then.

Investment in Gold ETFs up nearly 3-fold to Rs 4,400 cr
New Delhi, April 17
The Assets under Management (AUM) for Gold Exchange Traded Funds (Gold
ETFs) rose nearly three-fold to Rs 4,400 crore during the last fiscal. This shows that appetite for buying virtual gold is gaining popularity among domestic investors. The data was compiled by the Association of Mutual Funds in India
(AMFI).

Ludhiana honey exporter eyes world record
Ludhiana, April 15
Ludhiana-based export-oritented honey maker Little Bee Group is eyeing a world record — of exporting 4,000 tonnes of honey. Jagjit
Kapoor, CMD, said: “We have sent 4,000 tonnes of honey in 180 containers to sixteen countries. The majority of the share will be exported to US, Canada and West Asia,” he said.

China raises bank reserves requirement
Beijing, April 17
China raised banks' required reserves on Sunday for the fourth time this year, extending the fight against excessive liquidity and stubbornly high inflation in the world's second-largest economy.

Washington, April 17
The Reserve Bank of India has said global re-balancing will require deficite economies to save more and consume less while depending more on external demand.
Addressing a meeting of the International Monetary Fund, RBI Governor D Subbarao said that surplus economies will need to mirror these efforts and shift from external to domestic demand.

“Global rebalancing will require deficit economies to save more and consume less, while depending more on external demand relative to domestic demand for sustaining growth,” he said

"Surplus economies will need to mirror these efforts - save less and spend more, and shift from external to domestic demand," Subbarao said during his intervention in the ongoing Spring meeting of the
IMF here.

"The problem we have is that while the adjustment by deficit and surplus economies has to be symmetric, the incentives they face are asymmetric," he said.

The RBI governor said that letting exchange rates remain aligned with economic fundamentals, and an agreement that currency interventions should not be resorted to as an instrument of trade policy should be central to a coordinated approach at a multilateral level.

Subbarao said the recent crisis had brought home the complex challenges arising from the world having a single reserve currency.

In the ongoing search for solutions, he said, one option was to have a menu of alternative reserve currencies which fulfill the required criteria — full convertibility and the exchange rate determined by market fundamentals.

He said that recent international developments mark an 'ironic reversal' in the fears about globalisation. "Previously, it was the EMEs which feared that integration into the world economy would lead to welfare loss at home. Those fears have now given way to apprehensions in advanced economies that globalisation means losing jobs to cheap labour abroad," he said.
— PTI

India has said steps should be taken to increase the World Bank’s lending limits as developing countries are facing constraints in using the resources of the multilateral funding agency.

Addressing the World Bank Development Committee meeting yesterday, R Gopalan, Secretary (Economic Affairs) said measures needs to be taken to enhance the lending limits which are constraining the ability of India and other developing countries to utilise World Bank resources more. It also needs to invest more in agriculture.

He said that there is need to improve the financial capacity of the Bank further as the world has been "moving from one crisis to the other" — first fuel, then food, then financial and economic, and now the return of fuel and food crises.

While these crises demand global efforts to mitigate adverse effects, the World Bank Group needs to have sufficient financial resources not only to tackle crises, but also to support long-term growth. "In this regard, we are concerned that Bank lending will decline starting from next year," he argued.

"We need to deliberate now and in future on how we can strengthen the financial base of the Bank further. We need to take steps to ensure that just as it did over the last two years, the Bank has the capacity to respond to crises, play a counter-cyclical role that can make a difference and help in long-term growth," Gopalan said.
— PTI

New Delhi, April 17
Bank customers may soon expect better services and fast-track redressal of their grievances as RBI is likely to soon consider a fresh set of rules to improve the banks’ customer service practices.

Almost a year after RBI put in motion a process to improve banks’ customer service practices, a high-profile panel set up by the central bank in this regard is likely to submit its recommendations later this month.

Sources said that the panel was likely to suggest a tighter vigil by RBI for banks lacking on customer service front, monetary and procedural penalties and other remedial measures.

The committee, constituted by RBI in June last year under the Chairmanship of former Securities and Exchange Board of India chief M Damodaran, is likely to submit its recommendations on changes in existing policy framework and prevalent practices of customer service, said
sources. — PTI

New Delhi, April 17
Billionaire industrialist Mukesh Ambani-led Reliance Industries (RIl) plans a big splash in financial services sector, but may take a path different than those adopted traditionally in the business of money.

RIL signed a joint venture with global private equity fund house DE Shaw late last month for its financial sector foray and is now considering businesses where it can utilise its expertise and presence in sectors like energy and retail, as also its proposed telecom and power ventures.

The businesses that RIL wishes to undertake with DE Shaw include energy trading, private equity, mutual fund, financial service distribution, infrastructure funding as also equity and debt funding for corporate sector, sources close to the development said.

Emailed queries sent to both DE Shaw and RIL in this regard remained unanswered. The final contours of its partnership with DE Shaw, such as the shareholding pattern and businesses to undertake, may be discussed at RIL’s next board meeting on April 21.

Besides DE Shaw, RIL would also look at a number of other partners for various specific financial service businesses, as it has done in its retail business and to some extent in its energy operations, sources said.

The group would look at serving both corporate and individual customers with an equal focus through its various financial services offerings, they added.
— PTI

New Delhi, April 17
Diversified business house Tata Group will invest up to Rs 1.2 lakh crore across sectors in the domestic market in the next five years as it looks to more than double its revenues to $150 billion (about Rs 6.64 lakh crore)
by then.

The Tata Group, which has over 90 operating companies, will put in half of the planned investment in power sector, while the other significant portions will be in steel and automobile sectors.

“We have become a significant player globally in each of the sectors that we are present in. In the next five years, the pace of growth of the group will continue... The current investment assessment for the next five years is around Rs 1.1 lakh crore to Rs 1.2 lakh crore," Tata Industries Managing Director Kishor A Chaukar told PTI.

Tata Industries is one of the investment arms of Tata Group. This investment has been planned essentially for the Indian market.

On expected revenue after the investment will be made, Chaukar said: “It will be more than double in less than five years. I think it'll be around $140 billion to $150 billion.” The group has expanded to nearly $68 billion currently, from about $8 billion 10 years ago, he added.

He said the investment will be a mix of internal accruals and debt. “We are generating a considerable amount of internal accruals and at the same time also reducing current debt, which will enable us to raise debt. For this investment, the debt and equity ratio will be around 2:1,” Chaukar said.

Elaborating on its investment plans, he said: “The major sector will probably be the power. About half of the planned investment, that is Rs 50,000 crore-Rs 60,000 crore will be by Tata Power in the next five years.”
— PTI

New Delhi, April 17
The Assets under Management (AUM) for Gold Exchange Traded Funds (Gold
ETFs) rose nearly three-fold to Rs 4,400 crore during the last fiscal. This shows that appetite for buying virtual gold is gaining popularity among domestic investors. The data was compiled by the Association of Mutual Funds in India
(AMFI).

Investors in India, the world’s largest consumer of gold, have traditionally been buying physical gold. With steep rise in prices, some of them are shifting towards buying ‘virtual gold’ i.e. Gold
ETFs.

Gold ETFs are units that represent physical gold in paper or demateralised form. These units are traded on the exchanges National Stock Exchange
(NSE) and Bombay Stock Exchange (BSE). It offer investors a means of participating in the gold bullion market without taking physical delivery.

Gold
ETFs, launched in India in 2007, can be bought in units as low as one gram or even half-a-gram. There are as many as 10 asset management company
(AMC) offering Gold ETFs in the market.

On the NSE, the total traded value has jumped to over Rs 4,000 crore in the last fiscal from Rs 1,842 crore in 2009-10 financial year, sources said. Soaring gold price in the physical market has helped in growing investors interest for Gold
ETFs.

Gold, which is considered a safe haven and hedge against inflation, has been giving an annualised return of over 20 per cent in last four years. The prices of yellow metal that stood at Rs 9,357 per 10 gram in April 2007, has more than doubled to Rs 20,733 per gram in April 2011.

Gold prices touched an all time high of Rs 21,710 per 10 gram on April 15, last week. Despite high prices, investors are buying gold ETFs even on auspicious occasions like Akshay
Tritiya.

The NSE recorded Rs 172 crore volume on Akshay Tritiya last year and expects that the volume would be higher this year on May 6, sources said.

Delhi-based SMC Global analyst said, “Gold ETFs are doing well despite high prices. Demand is high from small players. I believe there will be good response on this Akshay
Tritiya.” — PTI

Ludhiana, April 15
Ludhiana-based export-oritented honey maker Little Bee Group is eyeing a world record — of exporting 4,000 tonnes of honey. Jagjit Kapoor, CMD, said: “We have sent 4,000 tonnes of honey in 180 containers to sixteen countries. The majority of the share will be exported to US, Canada and West Asia,” he said.

The honey exported consists of 25 different varieties including organic, sunflower, mustard, elaichi, multi-flora and eucalyptus.

Jagjit Singh Kapoor also known as the ‘Honey Man’ had won the ‘Golden Trophy’ from Agriculture and Processed Food Products Export Development Authority (APEDA), Ministry of Commerce and Industry.

“This year, we did business worth Rs 178 crore and our next year’s target is Rs 200 crore,” he added.

Beijing, April 17
China raised banks' required reserves on Sunday for the fourth time this year, extending the fight against excessive liquidity and stubbornly high inflation in the world's second-largest economy.

The reserve rate rise, which followed an increase in benchmark bank interest rates on April 5, was the seventh since China stepped up efforts against inflation in October and underscored the government's determination to keep the economy on an even keel.

The move was not a surprise - investors predicted more tightening after last week's data showed an acceleration in inflation, and more worryingly, sustained capital inflows that threaten to keep inflationary pressure high.
— Reuters

Tax Advice
Taxability of income depends upon source of funds
by SC Vasudeva

Q: My husband and have a joint saving account in a bank. Please guide me about the taxability of interest in our return of income. — Beant Singh

A: Taxability of income depends upon the source of funds. In case, funds in the joint bank account belong to both of you, the amount of interest received in such joint account would be taxable in ratio to the deposits less withdrawals by each of the account holder. In case the funds belong to the person who is the first holder, the amount of interest would be taxable in his hands. The interest earned in such an account would accordingly be reflected in the return of income.

TDS applicable

Q: My query is whether TDS is applicable on Participation Fee for
MBA Junction at any place on which service tax also has been charged by
the party as a provider of this service. Sir, also, TDS is applicable
when they did not charge service tax on their invoice in respect of
participation fee charged by them for MBA Junction, we are running a
charitable institute. —Surendra Kumar

A: The provisions relating to tax deduction at source in respect of amounts payable for specified activities are applicable to an Individual assessee only if he is subject to tax audit. I presume that the case referred to by you is in respect of participation fee paid/ payable by an individual to the institute. The institute being a recipient, the question of tax deduction at source should not arise.

Section 17

Q: Under Section 17 pertaining to valuation of perquisites, it has been provided as under : -

Fixed Education Allowance for Children:

Fixed education allowance given in cash by the employer to the employees to meet the cost of education of the family members of the employee is not taxable to the extent of Rs 100 per month per child (for a maximum of 2 children). An additional exemption is available in respect of allowance granted to meet hostel expenditure at the rate of Rs 300 per month per child for a maximum of two children. The remaining amount is taxable in all cases (i.e. in the hands of specified as well as non-specified employees).

One of my employees has submitted me a receipt of Private (PG) in r/o claiming exemption of Rs 300 per mont because his child was not provided hostel accommodation by the Institution in which student is studying and student has to live in surrounding area in PG.

Please clarify whether the expenditure incurred by the child for staying in PG instead of Hostel entitles the parents (who is in receipt of fixed education allowance) for claiming exemption of `300 per month as the children is not staying in hostel.

— NK Aggarwal

A: The exemption under Rule 2BB of Income-tax Rules, 1962 is permissible in respect of allowance granted to meet hostel expenditure subject to a maximum of Rs 300/- per month per child. Hostel Expenditure cannot be equated with the amount incurred to meet the expenditure towards paying guest accommodation. The term hostel is not defined by the Act or rules.

The dictionary meaning of hostel is "a place providing cheap food and lodging for a particular group". In my opinion therefore amount paid for paying guest accommodation is not within the nature of a hostel expenditure. There is thus a likely hood of such benefit being brought to tax.